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In addition, the U.S. government could opt to sell more shares than first planned in the initial public offering while GM could offer additional preferred shares, the sources said.

The prospect for a higher GM share price and an increased offering size mean that the initial loss to U.S. taxpayers from the bailout of General Motors GM.UL will be more limited than initially thought.

GM had earlier filed to sell common shares for $26 to $29 each. The move to the higher range would represent an 18 percent increase at the midpoint.

An increase in the $3 billion in preferred stock that GM had first planned to offer would strengthen the automaker's balance sheet since those shares represent a new issue.

A filing with the U.S. Securities and Exchange Commission that raises the offering price range has been prepared and is expected to be filed shortly, one of the people said.

Based on a diluted share count of 1.9 billion, $33 per share would give GM a market value of about $63 billion. GM needs a market value of roughly $70 billion for U.S. taxpayers to break even. The U.S. Treasury owns nearly 61 percent of GM as a result of its $50 billion taxpayer-funded bailout.

By comparison, Ford shares hit an eight-year high on Monday, valuing the No. 2 U.S. automaker at about $59 billion.

GM earlier filed to sell about $10 billion worth of common stock at the midpoint, and $3 billion worth of preferred shares, but was seeing out-sized demand.

A higher share price reflects growing investor confidence in GM, which emerged from a U.S. government-financed bankruptcy in 2009 with sharply lower costs and higher profit potential.

"Demand is high and the range is moving up. GM is in an easy position to ask for a higher price," one of the sources said.

An over-allotment option, or so-called green shoe, would be valued at another $1.8 billion at the midpoint of the new price range. That green-shoe option is expected to be exercised, sources have said.

IPOs are typically priced at a 10 percent to 20 percent discount to reward investors for taking a risk on a new issue.

But some analysts said the initial GM IPO pricing set the value of the top U.S. automaker at an even sharper discount to what their models suggested GM was worth given its projected cash earnings and comparison with its smaller rival Ford Motor Co (F.N).

SAIC Motor Corp (600104.SS), GM's longtime partner in China, is prepared to take a stake of at least 1 percent in GM as part of the IPO if the Chinese government approves the investment, people briefed on the matter said.